is this something that can be done here and that would be enough to avoid the so title of your book? >> it certainly can be and should be done here. it would be helpful for avoiding a massive meltdown. i do worry about the rest of the world and i think we should take a leadership role and should push for them to rein in their banks. they are much deeper. many countries are much deeper in the whole of relying on a relatively fewer acres than we are. we have by tradition by history and by established practice in more decentralized system and more countries to rid the system has become more concentrated overtime but we can reasonably imagine the situation we have $100 billion competing with each other and competing globally rather than that being small relative to the economy where some countries even a 100 million-dollar bank would be relative to the country and some countries including europe think the big banks are fine.

now first and foremost we deal with this ourselves and try to persuade people to come with us and if they don't want to come we have to consider what extent we regard as safe for the non-financial companies to do business with massive banks that could get in trouble in other countries and to what extent we want a massive banks that could cause problems to operate in the united states. we don't flexible allow u.s. citizens to bank with financial institutions based on their own. we have very clear rules that prevent you from interacting with banks in various countries because we regard that as not consistent with our national interest. i think those criteria have to be reassessed. we should push the allies to come with us and make the banks safer but if they want to cooperate and i think we have to reassess what we allow them to do in the country with our financial system and remember the driver, what people want to

participate in in in this economy is the dynamism, the information, the new companies, the resourcefulness of the people come and what i think and hope again we will once again be the resilient credit worthiness of the sector and the government sector. that's us. you get to work in the financial markets if you play by our rules. not on any other basis. it's the united states and that is the when you work and you can say to the outside world. other countries by the weak all other countries can say that we can and we should and i think on that note -- thank you very much. [applause] [inaudible conversations] to the 2008 economic

collapse. it is even was part of the greater omaha chamber of commerce 2010 annual meeting. [applause] >> , first of all i want to thank you for coming. i should declare right off the bat i am a friend of hank's.

have been. i admire him before he took the job, i admire him a lot more after the job is done as the secretary of the treasury. the name of this book is "on the brink" and that is where we were in 2007 and 2008. at that time, our economy, our financial world when it intracardiac a rest and we had four people in the operating room we were very fortunate as a country to have in place. we had hank, we had been bernanke tim geithner and sheila bair, the head of the fdic. i have a lot of people in finance, and a lot of people in business and a lot of people the government, and i can't think of for people that would have done

a better job of getting us through that. now it's kind of fashionable now to look back and pick out one of little aspect or another of what was happening, and our country's financial system froze up during that period. some of you in this room or at a party i was at in september of 2008 when the talk was are the money market fund safe? now, when you have 3.5 or more petroleum funds held by 30 million people, who on sunday and i are worrying about whether they can get their money, that money was half of all of the deposits held by the u.s. banks the time. you have a panic. you had commercial paper frees up an entirely and some of the biggest companies in the united states and some of them are described in this book they worry about whether they were going to meet their payroll in a short period of time to meet you

at the sixth largest bank in the country in terms of domestic deposits, washington mutual field over the weekend. you had the third largest bank, wachovia, the needed a shotgun marriage on a monday morning to survive. most interestingly, this book starts in early september when freddie mac and fannie mae were essentially broke. here are two institutions that guaranteed 40% or so of the residential mortgages in the united states whose debt was held all over the world and a very significant amounts including by foreign governments that would not have taken kindly to the default of freddie and fannie. you had them owning a very large portfolio of mortgages themselves, and like i say in early september debose were broke. ..

.. and, which have received in this complicated hank's problem, in a very short. met before september the watchdog agency that congress had established to watch these agencies had had given them a clean bill of health, and that clean bill of health might be fun to go back

and read that now. well, let's get onto hank's book when i got this book, i got it a little early and i expected to learn a lot about the financial crisis and i did, but i didn't realize that i would also learn something about how to attract women. [laughter] it is a little late i realize, but hank had a surefire, a surefire approach, which when he took windy out on their first date in boston, i would like you to describe it in if you would even like to elaborate on my little bit i would like to hear about it. >> let me say before he do that war and i am delighted to be here today in omaha. again, i have been a longtime friend and admirer of war and's and he was just a real pillar of

strength and source of strength for me during the credit crisis. warren was referring to something in the book. i was not a model of maturity when i was a senior at dartmouth college and i had my first date with wendy. we where at the boston pops, and she wasn't very impressed when i made my program into a paper airplane and sailed it at arthur >> did you hit him? >> no, no. but she gave me another chance. >> did she go home early that night? >> yeah, yeah. she went home early that night. >> fortunately he got a second chance. tell us a little bit about-- he says in the book, i am a tough guy. at one point he said that that he was a wrestler in high school and all ivy at dartmouth as a tackle and so on but when the

president asked him to be secretary of treasury, and hank's original reaction was not to do it but he decided to do it. he had one big worry and i think the crowd might be interested in knowing what makes a grown man crumpled. >> warren is talking about my mom. i am quite close to my mother. she is a strong mother. she is in engaged and interested in politics and policy and she was not an admirer of george bush and very unhappy with the war and very interested in women's issues and so on, so there have been a fair amount of speculation in the press that i might go to washington. i had turned down the opportunity a couple of times, and i had assured her that i was not going to go because i had no intent of killing. but then, when i had reversed myself and decided very suddenly it was the right thing to do not to say no to my country, i was in illinois, where we live and

still have our primary residence, and i was there on memorial day weekend because the president was going to make the announcement on the tuesday after memorial day weekend so i was seeing my mom. unfortunately, we were at church together. i had a longtime friend ask me about what i was doing next and i told her. of course she went up to my mom and said, isn't this great marianna? mom didn't think it was great, so when i arrived up to tell my mom, she had already known about it and i didn't see her sob much, but she was sobbing and very angry. angry and crying. she said to me, i started with nixon and now i was going to end up with bush and that i deserve everything i got. [laughter] and that i was jumping on a sinking ship. i will say this though, in the end, i say that by the time i

finished in washington, my mother had a different opinion of george w. bush. but, it is not a good way to start off in wendy was not much happier with me. 's be one of the most interesting things i found in the book and i had not heard a word about this before, was your account of how some top russian officials had gone to some top chinese officials with the suggestion essentially that they start dumping their bombs up probably freddie and fannie at that time. that almost sounds like a bear raid. i thought that was the sort of thing that just the evil guys on wall street did you tell me about that. >> it never happened, but we are very, very concerned about stabilizing fannie and freddie because as warren said, there

were 5.4 jillion dollars of securities that were either insured or issued direct we buy these institutions. they were highly leveraged institutions, and the securities were held i think about 1.7 trillion.ñr the biggest portion was inside the u.s., and we had gone-- i have been trying to get reform legislation from congress beginning in 2006, and to get the kinds of reforms we needed, but we were unable to get action until they were just on the edge, and so we were able to go to congress, get the authorities and then we needed to really spend time poring over their books, understanding the financial situation. i had, in the book, i recount that i was in china for the alum picks and dare i had, was given to understand that the chinese

had been approached by the russians with a suggestion that maybe they could sell some of of the securities together, maybe to test our resolve, who knows

and, one of the biggest concerns i had was getting fannie and freddie stabilized and in a sense, we tell the story of how very suddenly we put them into conservatorship, which was essentially guaranteeing their debt because it was in essence an implicit obligation by the united states of america. it was sort of like the banks had their lives in conduits wittes were off-balance edn with implicit guarantees. that was a little bit like what fannie and freddie were. we were racing against time to stabilize those before we knew some bad earnings were going to be coming out from the bank sector in particularly the lehman brothers losses so that was a race against time. we were fortunate that we were able to get it done without the markets becoming spooked or unstable, so that is why what i

had heard in china got my full attention. >> there is a front-page story in the journal this morning about freddie and fannie, and it is very much worth reading. i believe that said there is now 111 billion that has been put in by the federal government, but it is expected that much more will so in effect, it presently looks like the federal government will lose more money and freddie and fannie vanden aig by some markets. >> when i look at these programs overall, we will get every penny we put in the banks back with a profit. and i think when you look at all of the other programs, we may be surprised at what we get back in actually even with freddie and fannie i am thinking the fed will make a lot of money by holding the securities. you are right, in terms of the

losses. to me, the important thing about freddie and fannie is right now, the u.s. needs them playing the role they are playing, but one of the things that got us into this problem is not just freddie and fannie but if you look at all of the weight of all of our programs to stimulate housing, and it just has gone too far, and freddie and fannie are not going to be able to stay in their present form. they need to be, i think their mission needs to be sure. they need to be restructured in very fundamental ways. at right now, we need them where they are, but i think how we, how we unwind the situation is going to be very important. >> when you were getting grilled by congress said they would point out how there was too much

leverage in the banking system, did you ever get tempted to say the institution they ran had the most leverage of all? >> i got tempted to say a lot of things, warren. [laughter] but i resisted that temptation because one of the things that i am pleased about was that i was able to build enough relationships on both sides of the aisle that congress did enact before the system collapsed, and if it had collapsed, we would have easily had 25% unemployment in this country. it would have been a terrible situation and the book is very, to a large extent, the story of the collision of market forces and political forces. and the crisis came in many ways that the worst time with an election on the horizon, and so what i needed to do was to get action from congress and actually what we got with betty and franny-- fannie which was

unlimited authority. i used use the word in specified it sounded better, but we needed those. but i had have to keep reminding people that i didn't design this thing it didn't create it. >> hank, you have relations with the chinese long before this and you used them to good effects during the crisis and i think you told me you had been to china may be 70 times or so. what would be the american public's conception about the chinese and their economic system? >> well, i do believe there is a lot of misconceptions the americans have even about our own economic system. but, i think the thing that we all need to keep in mind is we are operating in a global economy, and so when other

important economies don't do well, it hurts us, just like when we don't do well, it hurts others. and so, the worst thing that can happen to us and could have happened to us during the crisis would need to have had the chinese economy fall through and stopped growing. looking ahead, we need china to keep doing well. it is in our best interest to have them keep doing well. now there are plenty of differences and there are differences in the economic area and in other areas, but i think the most important thing for americans to understand is that there is a relationship where we are opposed to a large extent dependent upon the other. we of course in the u.s.,--

excuse me. can you hear me okay? in the u.s. we don't save enough. we have a tendency to save little as a people and as a nation we borrow too much. and, so the chinese are very important to our capital markets. now, the chinese save too much, and they need to continue to open up their economy, and continue to open it up to competition, to move forward with the reform process, to reform their currency, to move more quickly to a market-driven currency, all those things. they are very important differences, but we just need to remember that this is a relationship we need to get right and we need to work very hard to get it right. >> you were telling that in much more general terms from time to time. what sort of response did you

get when you talked to them about spending more? >> i would simply say that one of the things we started under george bush was this strategic economic dialogue, which is being carried on, and what i generally said-- we agreed on principle, so they agreed we would-- they needed to open up the economy to competition and needed to continue to move their currency. so it was to a greater extent determined by the market, but we agreed in principle and philosophy, but it was a matter of speed. so, i would be thinking they needed to move this far and this period of time and they were thinking they needed to move this far in this period of time, but we talked very directly

about it, and i think the thing that you need to remember is that in dealing with the chinese or any other sovereign nation, we need to put it in terms of what it means to china and their people, and i was just totally convinced that, to the extent they sped up their process of reform, it was only going to benefit them and help them get where they want to get over the longer term, and i would say to them, i believe in free trade and open markets but you will make it easier for me to fight to keep our markets open if you speed up the process of opening up your markets. but i felt we got very good results if you look at the history and you look at what happened to the currency. when i have a dialogue with the chinese, i think the record will

show that it moved, that we-- i was very proud of this 10 year framework on energy and the environment, because again, we are not going to solve the issues of climate and so many environmental issues we have an energy issues unless you get the two biggest, among the two biggest importers of oil and the two biggest emitters of carbon to work together. and there is a lot we can do working together between our two countries. again, i am a big believer in engagement because there is very little you can do in this world that is important globally that is done on a unilateral basis. >> you mentioned president was. i am a little bit like your mother. in fact, remember she has changed her mind.

>> but, through the book, i got more appreciation for what he did in this particular situation. in fact, i read various economists, eloquent ones, adam smith or david ricardo or keynes and all of that but i had never heard a more eloquent statement that's distinctly summed up the economic world than george bush made in september of 2008 when he said in a memorable 10 words. he said if money doesn't listen up, this is going to go down. [laughter] i mean, it was like the gettysburg address, short but to the point. [laughter] as i read the book, i really did

gain an appreciation for the fact that he understood what was going on and he understood what needed to be done. was there ever a time he went to them with proposals that he shot you down on? >> no, he was only surprised when i was surprised. >> what was the biggest surprise? one of the things i learned from warren is no matter what you negotiate, i can have all kinds of understanding about the relationship we would have been if i didn't have the right relationship, it wasn't going to be his fault, it was going to be my fault so i had a year before the crisis to get the president to work with them. remember, he went to business school. he had a good fundamental

understanding of markets and economic issues. he cared about them, so the conflict he dealt with was the same conflict i dealt with or anybody in the markets. we believed they united states of america that risk-taker should bear the responsibility for their own losses. and, so big interventions are not something-- i didn't go to washington to do that and he certainly didn't but from day one, he understood the financial markets were about our economy and jobs, so repeatedly i would be coming to him and i wouldn't have to sell him halfway through the conversation. he would lock me up and say listen hank, we will get her this. these are going to be, this is going to be politically unpopular but we are not going to let our economy go down. we will do what it takes to save

jobs, save the economy and that was his point of view. and you talk about my mother. he would be telling me i need to work out, need to get more sleep. >> and terms of the other people on the political stage, seem to me that going up to the election , you probably felt that barack obama was both more knowledgeable and had more interest in what was going on in the financial crisis than john mccain. is that a fair assessment? >> let's say, it is no doubt fair that i had the conversations i had with john mccain were just as frequent as they were with barack obama. they were more difficult and i certainly, he certainly gave me more anxiety about all of that. and, you